Trump seeks talks to overhaul South Korean trade deal

Thursday, July 13, 2017 - 07:28 AM

The Trump administration is seeking talks that could lead to the renegotiation of a free-trade agreement with South Korea.

US trade representative Robert Lighthizer said in a letter to South Korean trade minister Joo Hyung-hwan that the United States wants to meet to discuss "possible amendments and modifications" to the pact that that went into effect five years ago under President Barack Obama.

The terms of the trade deal call for the talks to begin within 30 days.

Mr Obama had predicted that the pact would increase US exports to South Korea, the world's 11th-biggest economy.

Instead, US exports of goods to South Korea fell from 2011 to last year, and the US trade deficit in goods with South Korea widened from 13.2 billion US dollars to 27.6 billion dollars over the same period.

The Trump administration blames the rising trade gap on continuing South Korean barriers to US exports, especially in the auto market. But other analysts cite South Korea's sluggish economy and note that other countries have seen their exports to South Korea fall even more.

Jeffrey Schott, senior fellow in trade policy at the Peterson Institute for International Economics, says it would make sense to update the US-South Korea trade deal to cover emerging businesses such as e-commerce.

The administration focuses on trade in goods, such as airplanes and washing machines. But Mr Schott points out that the US runs a trade surplus with South Korea in services, such as banking and tourism.

Including services, the overall trade deficit last year was 17.6 billion dollars, a fraction of the deficits of 309.3 billion dollars with China, 63.1 billion dollars with Mexico and 57.1 billion dollars with Japan.

President Donald Trump has criticised past trade deals and has already begun an effort to renegotiate the North American Free Trade Agreement with Mexico and Canada.